STOCK MARKET SURGE A "MISTAKE" WED 09-01-04

NEW YORK (Dow Jones)--Small-capitalization stock gauges jumped at Wednesday's opening in a move that traders attributed to a large errant buy program.

Traders say a large buy program caused a brief rally in the Russell 2000 Index of small-capitalization stocks, sending the gauge up 15.45, or 2.8%, in the first 10 minutes of trading Wednesday. The Nasdaq Composite Index of large-cap and small-cap stocks jumped 20 points, or 1%, in the same time period.

At least four trading firms said the buy program was generated from Morgan Stanley (MWD). Spokespeople for Morgan Stanley weren't immediately available for comment. David Memmott, head of block trading at Morgan Stanley, declined to comment.

A Nasdaq spokeswoman said the exchange was the investigating the trades. A spokesman for Russell wasn't immediately available for comment.

The buying stopped soon after it started, causing a reversal in some of the stocks affected.

Cable television company Charter Communications Inc. (CHTR) was among the stocks that got a big lift, surging 22%. It was recently up 10 cents, or 3.1%, to $3.29. Optical-equipment maker Finisar Corp. (FNSR) jumped 55%, while another telecom gear producer Avanex Corp. (AVNX) gained 31%. They're now both up by about 7%.

The Russell 2000 is now up 5.64, or 1%, to 553.57, and the Nasdaq is ahead 12.76, or 0.7%, to 1850.95.

-By Cynthia Schreiber, Dow Jones Newswires